Collateralized debt obligations rated by Moody's Investors Service set records for issuance and volume last quarter. The number of rated transactions grew 14% to 172 from the second quarter. Compared to the third quarter of 2005, the number of new transactions grew 76%, according to the ratings agency. Moody's anticipates this momentum will continue to the end of the year. It predicts that all of 2006 will be about 55% more than last year's deals and volume.
Collateralized loan obligations, cash resecuritizations and hybrid CDOs made up about 50% of the new ratings in the third quarter and about 72% of new volume. There were 45 CLOs in the third quarter and 23 newly rated cash resecuritizations. For U.S. CDOs, about 48% of the collateral was corporate bonds, while 39% was structured debt.
The ratings agency, however, did not see as much utilization of loan-only credit default swaps as it had anticipated. It said it was used to a limited degree in synthetically referencing single-name loans in existing cash flow CLOs. Author Richard Michalek, v.p. and senior credit officer, was traveling and could not be reached. Suzanna Sava, analyst and a co-author, did not return a call.